Tuesday, May 31, 2016

Summers on roadblocks to infrastructure

The bureaucrats of Massachusetts have done the nation a wonderful service, by parking an abject lesson in America's infrastructure sclerosis right in front of Larry Summers' office.

Summers and Rachel Lipson have written a remarkable Op-Ed in the Boston Globe, and Larry a deeper follow-on piece on the Washington Post Wonkblog, detailing the 5 year struggle to repair a bridge that took 11 months to build in 1911.

The narrow story:
How, we ask, could our society have regressed to the point where a bridge that could be built in less than a year one century ago takes five times as long to repair today?
In order to adhere to strict historical requirements overseen by the Massachusetts Historical Commission, the Massachusetts Department of Transportation had to order special bricks, cast by a company in Maine, to meet special size and appearance specifications from the bridge’s inception in 1912.
...extensive permitting and redesigns haven’t helped. 
And the rest reads like a typical Wall Street Journal oped anecdote of regulatory incompetence, fodder for my next weekly summary.

Larry's Post follow on is deeper:
Investigating the reasons behind the bridge blunders have helped to illuminate an aspect of American sclerosis — a gaggle of regulators and veto players, each with the power to block or to delay, ...
At one level this explains why, despite the overwhelming case for infrastructure investment, there is so much resistance from those who think it will be carried out ineptly. 
Stop for a moment here. This sentence is a watershed moment. Larry is one of our foremost public-intellectual economists. He's been arguing for years for infrastructure spending, first as "shovel-ready" stimulus to fight the recession, lately as the remedy for "secular stagnation." So far, he's been arguing mostly for more money, and not highlighting regulatory roadblocks. The Democratic party (not Larry) line is that infrastructure is the fault of stingy Republicans who won't spend the money.

But here is Larry, listening, and urging his readers to listen. Savor the sentence: "This explains why.. there is so much resistance from those who think it will be carried out ineptly." How often, in American public life these days, do we see a prominent, party-aligned, public intellectual listen hard and understand what's bothering the other side? No, it's not that they are stingy, mean-hearted, evil, or whatever. It's that they don't trust the money to be spent on the right thing, in the right place, in finite time. They have a point.

(I had a conversation with Larry a while ago, that went something like this: Larry: We need more infrastructure, and borrowing money is really cheap right now! John: Yeah, but they'll just blow the money on a high-speed rail line from Tonopah to Winnemucca, and even that will be held up for 10 years of EPA reviews and lawsuits. Larry: Oh, John, there you go again exaggerating how bad regulations are... Maybe I can flatter myself that I nudged him a little here.)
The right response is to advocate for reforms in procurement policies, regulatory policies and government procedures to make the investment process more efficient and effective.
This is a watershed. Here is the kind of reach out for middle ground that could unlock our political and economic sclerosis.  Larry is likely to be in government again sooner or later, and I hope he will push hard for this -- and with more effect than the last hundred or so anti-red-tape and regulatory reform commissions.

Larry's change of heart, or at least change of emphasis, seems deeper:
I'm a progressive, but it seems plausible to wonder if  government can build a nation abroad, fight social decay, run schools, mandate the design of cars, run health insurance exchanges, or set proper sexual harassment policies on college campuses, if it can't even fix a 232-foot bridge competently. Waiting in traffic over the Anderson Bridge, I've empathized with the two-thirds of Americans who distrust government.
It's not about who cares. It's about competence. We can work together to fix this. Wow. Thank you, Massachusetts Historical Commission.
More than questions of personality or even those of high policy, the question of how to escape this trap should be a central issue in this election year
That is not likely to happen in our Presidential race, but it surely should be a focus of Congressional elections, and the realignments happening now in Congress to try to escape paralysis.

In that context, I heard recently of one lovely small proposal to help "escape this trap." If you're fixing a bridge that is already there, you are exempt:
Amendment 4065 Mr. SULLIVAN [Senator Dan Sullivan, Alaska] (for himself and Mr. King [Angus King, Maine] submitted an amendment ....to the bill H.R. 2577... as follows:
Any bridge eligible for assistance under title 23, United States Code, that is structurally deficient and requires construction, reconstruction, or maintenance--

(1) may be reconstructed in the same location with the same capacity and dimensions as in existence on the date of enactment of this Act; and

(2) if the environmental impacts of the construction, reconstruction, or maintenance are not substantially greater than the environmental impacts of the original structure, as determined by the applicable State environmental authority, shall be considered to be compliant with the environmental reviews, approvals, licensing, and permit requirements under--

(A) the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.);

(B) sections 402 and 404 of the Federal Water Pollution Control Act (33 U.S.C. 1342, 1344);

(C) division A of subtitle III of title 54, United States Code;

(D) the Migratory Bird Treaty Act (16 U.S.C. 703 et seq.);

(E) the Wild and Scenic Rivers Act (16 U.S.C. 1271 et seq.);

(F) the Fish and Wildlife Coordination Act (16 U.S.C. 661 et seq.);

(G) the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.), except when the reconstruction occurs in designated critical habitat for threatened and endangered species;

(H) Executive Order 11990 (42 U.S.C. 4321 note; relating to the protection of wetland); and

(I) any Federal law (including regulations) requiring no net loss of wetland.
I kept the long list as a reminder of just how many laws and regulations are in the way of fixing a bridge. Alas, the Senators forgot about the National Historic Preservation Act of 1966, which seems to be mainly behind Larry's traffic jam.

I gather this amendment provoked a  specific veto threat. Well, maybe next time.


  1. Recently, i met a local congressman running for re-election(his campaign manager works in the same floor of our building). I asked him if there was any politician he knew who wasn't being affected by public choice(refreshingly, he was familiar with the term). He paused for a minute then flatly replied, "No."

  2. Summers is a Democrat only because he is closer to them psychometrically than to Republicans. But he isn't very loyal to the tribe. We remember the moments where he spoke with little respect for tribal sensibilities - this is after all what got him into trouble as president of Harvard. Most people are much more conscious of the risks involved in stepping out of line. Fiscal policy in itself isn't a very sensitive issue, but it's just one of a thousand opportunities to show that you are a right-thinking member of the Progressive cause, and maintain your good standing.

  3. This is impacting nearly every business in America. Not only are laws and regulations incredibly complex (Dodd-Frank now past 22,000 pages), they are also nearly impossible to accurately interpret and don't take shape until case law (incredibly expensive and time consuming) is set. I'd say this ranks near the top of reasons for our slow economic growth. As Warren Buffett might say, most things these days are in the "too hard" pile

  4. That a bridge built in 1911 in less than a year can't be fixed after X years of government-run repairs isn't the real question. A deeper question is how come Europe is still dotted with usable Roman bridges and Greek amphitheaters all those millennia down the line while public infrastructure built in the US is in such dire need of repair.

    1. Have been the Roman bridges constantly used by heavy-duty trucks?

  5. Larry Summers... is he not the guy who yelled at Brooksley Born (chairwoman of the CFTC in 1998) because she had dared to suggest to regulate derivatives way back then? Is he not the guy who dressed down Raghuram Rajan at a meeting in Jackson Hole in 2005, because Rajan dared to say that financial developments had made the world riskier?
    It's nice to see Summers criticizing regulations. But I don't trust the guy, and I do not believe anything he says, sorry, including the words "and" and "the" that he might utter.

    1. Trust is indeed one of the benefits of affiliation. Summers seems to be relying more on intellectual dominance than affiliation, which leaves him vulnerable to charges of being unnecessarily abrasive. Some of us appreciate candor much more than others!

    2. That is really clever. Thanks. I once attended an event in which Summers dismantled Hubbard with some very silly metaphors and a glare. I agreed with him and was still appalled. I think it is fun that what Larry Summers says now is what David Rosenberg (who?!) said five years ago at the Munk debate against Summers.

  6. I agree with this post.

    That said, there is weakness on the American Right, to only examine boondoggles on the civilian side. National security boondoggles remain off limits.

    Given the more than $6 trillion in outlays and incurred liabilities in Iraqistan, this is a shortcoming.

    For that matter, the U.S. Naval Institute (military guys) reports the $1.5 trillion fighter-plane project F-35 is no longer stealthy (changes in the radar of adversaries), but that performance has been compromised to try to be stealthy. Smaller payloads, less flight range, slower etc.

    The F-35 will get built, no matter. Too many Congressional districts and lobbyists involved. Oh, the airframe for the F-35 will be built in...Turkey.

    Why Turkey? So they will buy the plane when built.

    It is not about what is the best way to build the plane, or if it is a good plane, but who gets the money to build it. Like all federal projects, the F-35 seems to be taking forever, and nary a plane in service.

    Yes, in WWII planes were designed and built and in the air in a couple of years. What the Brits did with the de Havilland Mosquito is amazing. One of the best fighter-bombers of the war.

    It would be nice if the American Right expended scrutiny across the board of federal spending.

    The national security budget (DoD, DHS, VA, black budget, prorated interest on debt) is now $1 trillion a year.

    1. "Weakness" is a VAST understatement. Good post. To your last point, most of the DOE is defense also I believe (nuclear weapons)

  7. John,

    "I had a conversation with Larry a while ago, that went something like this:
    Larry: We need more infrastructure, and borrowing money is really cheap right now!"

    My questions would be:

    1. Larry, if money was expensive would not bridge disrepair still be a safety issue?
    2. Larry, are you concerned that the federal government will go bankrupt?

    Larry has not yet made the intellectual leap:


    "...the investment decision is independent of the financing decision..."

    And so your first question to Larry should have been - Irrespective of cost, why should the government borrow - ever?

  8. How to build infrastructure---on time, within budget and for something that makes economic sense:


  9. This sad comment on Summers reminded me of an even sadder one. This is how Sen George McGovern, once a proud liberal candidate for the Presidency, discovered life as a simple entrepreneur after leaving politics. Here's a link about that:
    Hw tried a business venture, but gave up in the early '90s because of all the federal regulations that made it impossible. At least he had the decency to write about it and confess his earlier sins. And things have got a lot worse since then, it's amazing anyone can start a business any more.
    McGovern and Summers remind of the wonderful scene in Shakespeare's Henry V where King Harry walks incognito among his troops the night before the big battle. One soldier says that if they die in a just cause, all is good, but if the cause be unjust, it's on the King, for they are just loyal soldiers doing their duty, and the King will rot in hell for it. And when McGovern and Summers deign to walk with the soldiers for a brief moment, they find that their cause indeed is unjust, but also that they are powerless to do anything about it. They helped make the beds for others to lie in, but can't undo it. Shameful, that.

  10. Good article and points made, in comment section also. But leadership also matters -- in politics and the business and civic community. When LA suffered the Northridge earthquake and freeways were damaged, Mayor Riordan faced many of these same obstacles and had the freeways up and running in about a year -- compare that with the Loma Prieta earthquake in the Bay Area and how long freeway repair took as they constantly reviewed the concerns of citizens.

    1. Don't remember if the Santa Monica freeway job fell under Richard Riordan's jurisdiction, but the point is valid. The contractors were told to build the freeway on time to get a bonus.

  11. There are political scientists and law professors who have been worrying about this tendency in U.S. society for a long time, such as the late Aaron Wildavsky (see Implementation by Pressman and Wildavsky, 1973) and Peter Schuck (see Why Government Fails So Often: And How to Make it Better, 2014).

    1. Aaron Wildavsky? Boy that goes back. Took a class of his in the disco days...

  12. Reading this essay about red-tape, I'm reminded of a trip to Mexico a few years previously. Leaving the hotel for a stroll, I encountered a deep hole in the sidewalk. No safety barrier, no warning sign, just a deep hole. Quite an efficient use of construction resources there--unless and until someone fell in.

    In the US we erect safety barriers and we put up warning signs. That costs in efficiency.

    For the sake of greater efficiency, would Cochrane like to see us move in the direction of third world countries? Should we get rid of the safety checks? His essay leaves me with that impression.

    1. It is always so refreshing to read the rebuttals from intellectually honest folks who do not hyperbolize or create straw-man arguments. We all learn so much from such open and honest dialogue.

  13. As an intermountain resident, I appreciate that John threw Tonapah and Winnemucca in there.

    Dave Tufte, Professor
    School of Business
    Southern Utah University
    Cedar City, UT

    1. My gliding travels take me to some interesting places. Next high speed train, from Parowan to Ely.

    2. If you are looking for the most isolated spot in the Lower 48 may I suggest north of Winnemucca on Rt 140 going into Oregon.

  14. Two big causes of the delay seem to be as a result of design changes rather than red-tape per se.

    Better, more competent planning before they started might have avoided a material part of the delay.

  15. You must have loved writing that. I don't know what a petard is but would have Googled it.

  16. http://www.northjersey.com/news/agencies-want-gateway-project-s-environmental-review-fast-tracked-to-save-billions-1.1568993

    There's a proposed tunnel from NJ to NYC, and Senator Corey Booker wants it to be fast tracked, bypassing regulations to save billions of dollars.


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